These appropriations fund revenue sharing programs. The state of
Michigan collects more than $1.5 billion that is then turned over to local
governments. Of this amount, a little more than $679 million is
constitutionally mandated, while the remainder is distributed by legislative
direction. Some of these funds are distributed through the Revenue Sharing Act
of 1971, while others are distributed through individual tax statutes.

Recommended Action:

Revenue sharing should eventually be eliminated. The vast majority
of revenue sharing simply allows some communities to provide their citizens with
services below the actual cost of providing them, encouraging the overuse of
these services. It also reduces competition between communities, which would
encourage efficiency in local governments. Revenue sharing taxes some citizens
simply to give money to the governments of communities in which they do not
reside. This is what Frederic Bastiat, a 20th-century French
legislator and essayist, would have called “legalized plunder.”[11]

The state should reduce its revenue sharing by 50 percent of what
is not mandated by the Michigan Constitution. This would reduce the injustice of
taking from some Michigan citizens to give to others, and would improve the
efficiency of local governments. A 50 percent reduction in statutory revenue
sharing would yield savings exceeding $340 million. This money should be
redirected to the General Fund. Savings: $344,665,000.